The current investment property landscape is rich with opportunities. The big question many have is if they should use financial leverage, and if so what international mortgages are available to them?
There are many ripening property investment opportunities around the globe. In many ways markets are experiencing an incredible aligning of the stars which provide the ideal timing for new income property acquisitions. Whether restructuring and optimizing an existing portfolio, or launching into real estate investing for the first time it is an attractive time to seize opportunities, ramp up property holdings, and it is always wise to be diversified.
Scaling a portfolio requires capital. Even for those who sometimes feel that they are burdened with too much capital, there are many advantages of using leverage to acquire more investment properties. This is even true today as global interest rates prepare to swing upwards.
So what international mortgages are open to global property investors today?
There are four main strategies for financing overseas investment properties to choose from.
Leveraging Existing Home Equity
Accessing home equity from an existing residence in a property investor’s home country may be one of the simplest solutions. This affords investors a straightforward, and easy to navigate process, often with streamlined processing. This is especially true for those with existing local banking relationships. Tapping into equity in a primary residence for investment purposes may not be highly recommended by many financial investment advisors for obvious reasons, and may be best suited to those planning to sell and relocate in the near future, as well as kept within moderation.
Lines of Credit
Both secured and unsecured lines of credit can be incredibly advantageous for financing overseas property. Lines of credit offer flexibility, eliminate third party hurdles to increase speed of action, enable investors to retain the benefits of acting as cash buyers, and mean only paying interest on the portion the line being used at any one time.
International Mortgage Brokers
Several international mortgage brokerages have been established specifically to serve overseas property investors, and those relocating abroad. Names like Conti and Complete Finance act as independent financial advisors providing unbiased help for securing international mortgages for new residences, second homes and income investment properties. They help to navigate and simplify the process in the borrowers’ language and match buyers to trusted auxiliary service providers for conveyance, property valuations, foreign currency exchange, banking and legal assistance.
On the Ground Financing
International mortgages may also be available on the ground in the destination countries in which investors are buying in. Going direct to local financial institutions may have some perceived advantages. Yet, local mortgage professionals may be less well equipped to assist, as they may not be familiar with the differences from investor’s home countries. In addition to mortgage brokers, some international banks specifically catering to global investors and foreign nationals may make financing easier for those willing to open substantial deposit accounts.
In the USA, new lenders are currently coming to market with international mortgages backed by some of the largest private equity and hedge funds. Both Blackstone and Cerberus have recently announced billions of dollars in capital being funneled down to rental property investors in America. Rental Home Financing announced it is unveiling new mortgage products specifically for foreign nationals seeking to acquire or refinance portfolios of rental properties in the USA. According to their website non-recourse loans are available from $500k to over $35M USD, with up to 75% loan to values.
Before committing to an option, investors should educate themselves on the perks and quirks of each option, as well as local differences in title, conveyance, typical practices, insurances, etc.